In early December 2021, the IRS published the final Affordable Care Act (ACA) reporting instructions for the 2021 tax year filing (and the 2022 calendar year). The instructions for Applicable Large Employers (ALEs) include the final 1094-C and 1095-C ACA reporting forms, new codes related to individual coverage health reimbursement arrangements, details on every filing deadline, and information about electronically filing forms with the IRS.
Six Considerations all Applicable Large Employers (ALEs) Must Know in 2022.
1. The final versions of Form 1094-C and Form 1095-C have been released.
Employers will find the final 2021 versions of Form 1094-C and Form 1095-C here. These forms are nearly identical to the draft versions of each file form released in July.
2. There are two new codes for Form 1095-C, Line 14.
Employers who have adopted an Individual Coverage Health Reimbursement Arrangement (ICHRA) have two new codes available, either the 1T or 1U code.
The 1T code is for instances when the applicable individual and their spouse are offered an individual coverage HRA. The affordability is determined via the employee’s primary residence zip code. Employers would not use this code if dependents were offered coverage.
The 1U code is for instances when the applicable individual and their spouse are offered an individual coverage HRA and affordability is determined based upon the employee’s primary employment site zip code affordability safe harbor. As with the 1T code, the 1U code would not be used if dependents were offered coverage.
3. 1095-C statements may be made online.
Employers (and the third parties who assist them with ACA filing, such as MP) may now furnish 1095-C forms online. (Note employers with over 250 forms to file must do so electronically.) Filing online confers a few benefits, including:
- A later deadline
- Immediate documentation to prove filing is complete
- Immediate feedback on errors and data discrepancies
4. The Good Faith Transition Relief is eliminated.
As they file their ACA reports, employers should remember the Good Faith Transition Relief is no longer in effect. The IRS eliminated this protection for reporting entities this tax year. Good Faith relief has been eliminated because ACA reporting requirements have been in effect for five years. The IRS considers this time long enough for employers to be familiar with the process and no longer make errors. Reporting entities should scrutinize and review all information before forms are filed with the IRS. Inaccurate reporting will result in full penalties this year.
5. ACA reporting deadlines have been permanently extended.
In previous years, the IRS has released an extension to the usual January deadlines for furnishing 1095-C and 1095-B forms. This year, and every year after, there will be an automatic extension of deadlines until later in the first quarter of 2022: March 2, 2022. Note, this automatic extension will not apply to paper filing ACA deadlines.
6. Final deadlines for reporting entities.
- February 28, 2022: Employers with less than 250 1095-C returns may elect to file via paper. This deadline is concurrent with the 2021 paper filing deadline for all taxes. Employers that elect to paper file should note they may not be able to continue this process in upcoming tax years. Proposed IRS regulations may reduce size eligibility to 10 or fewer 1095-C returns by the 2023 tax year.
- March 2, 2022: All reporting entities must furnish their 1095-C forms to applicable employees by this date. (It’s likely the January 31 date will no longer be applicable. The March 2 due date will be required every tax year after 2021.)
- March 31, 2022: This is the deadline for filing 1094-C and 1095-Cs electronically. Completing ACA reporting electronically is beneficial for multiple reasons, including a March 31st deadline.
- August 1, 2022: Self-funded employers and health insurers must submit annual Patient Centered Outcomes Research Institute (PCORI) fees by this date. PCORI fees are paid via Form 720. Employers should note that PCORI fees will be extended through 2029 (though they were initially intended to expire in 2020).
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